9911796707
TMI Blog2016 (10) TMI 717X X X X Extracts X X X X X X X X Extracts X X X X ..... e. First we take up assessee's appeal in ITA No.216/Kol/2013. 3. Grounds raised by the assessee in its appeal are as under:- "1. For that in view of the facts and circumstances of the case the Ld. CIT(A) was wholly wrong and unjustified in confirming the arbitrary disallowance of the payment of commission of Rs. 8,29,500/- made to the sister concern M/s Macleod Fuels Pvt. Ltd., without properly considering and appreciating the facts and the detailed explanation furnished by the appellant assessee firm. The actions of the AO & the Ld. CIT(A) wee wholly unwarranted, uncalled for and bad in law. 2. For that in view of the facts and circumstances of the case the Ld. CIT(A) was wholly wrong and unjustified in confirming the arbitrary disallowance us/s 40(a)(ia) of the Act of the payment of carriage inward expense of Rs. 6,99,508/- made to M/s Vikas Enterprises during the year itself by way of re-imbursement for transportation of goods on the alleged ground that the assessee firm had failed to deduct tax at source on the said sum u/s. 194C(1) of the Act. The decisions taken by both the Assessing Officer & the Ld. CIT(A) without properly considering and appreciating the facts and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance of payment of commission of Rs. 8,29,500/- on account of payment to sister concern. 5. Facts in brief are that assessee-firm carried on business of manufacturing Low Ash Metallurgical (LAM for short) coke out of raw coal imported from Australia and also from indigenous sources. During the year under consideration, assessee has paid commission to M/s Macleod Fuels Pvt. Ltd. (for short MFPL) in which almost all the Directors are the partner in the assessee firm. The assessee claimed that MFPL assisted in the job of unloading and loading of imported coal and it also provides the advance information for the arrival of the ships from Australia. However, the AO observed that the assessee has already claimed separate expenses as "Port Expenses" amounting to Rs. 47,08,371. There was neither any agreement to pay commission between the assessee and MFPL nor any evidence that the MFPL has rendered any services to the assessee. The MFPL does not hold any license to perform the above explained functions from the port. The assessee deducted TDS on commission paid to M/s MFPL @ 2% while it should be 10%. Accordingly, the AO disallowed the same and added to the total income of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices to the assessee. The Tribunal noted that the onus was on the assessee, claiming such deduction, to establish that such payments were made for services rendered. In view of the above conclusion, we do not see any scope of entertaining such question." In the absence of the specific services rendered, we find no reason to interfere in the order of the ld. CIT(A) and same is upheld. Assessee ground is dismissed. 9. Next issue raised by assessee is as regards that Ld. CIT(A) erred in confirming the action of AO by disallowing the carriage inward expenses of Rs. 6,99,508/- on account of non deduction of TDS. 10. The charges were paid to Vikas Enterprises towards the carriage inward expenses for the transportation of coal without TDS. Therefore the AO disallowed the same and added to the total income of the assessee. The assessee preferred an appeal to Ld.CIT(A) who upheld the decision of AO by observing that even though there is no any agreement but the payments were made for hiring of trucks. So the provision of Sec 194C is applicable. Being aggrieved, by the order of ld. CIT(A) assessee came in second appeal before us. 11. Before us Ld. AR for the assessee requested the Ben ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ia) is declaratory and curative in nature and has retrospective effect from 1st April, 2005, being the date from which sub-clause (ia) of section 40(8) was inserted by the Finance No.(2) Act, 2004, even though the Finance Act, 2012 had not specifically stated that proviso is retrospective in nature. The High Court affirmed the ratio laid down by the Agra Tribunal and held that said provisos is declaratory and curative in nature and ha retrospective effect from 1st April, 2005." Respectfully following the aforesaid decision of the Hon'ble Delhi High Court in the case of Ansal Land Mark Township (P) Ltd., (supra) we deem it fit and appropriate in the interest of natural justice and fair play to set aside this issue to the file of AO to decide the issue afresh in the light of the aforesaid judgment. Accordingly, we direct the AO to verify whether the payees have included the subject-mentioned receipts in their respective returns and paid taxes thereon or not. If that is so, then disallowance u/s. 40(a)(ia) of the Act shall not be made in the hands of assessee. Accordingly, assessee's ground is allowed for statistical purposes. 13. Next issue raised by assessee is as regards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese expenses are out of the purview of TDS provisions. The ld. AR also alternatively submitted that the matter can be restored to the AO for verification whether the receipts has been included in the books of the company. On the other hand the ld. DR vehemently supported the order of the lower authorities. 17. We have heard the rival parties and perused the materials available on record. We are finding that the assessee at the time of assessment submitted that the expenses are actually the part of the purchases. But before the ld. CIT(A) he changed the plea that these are reimbursement of the expenses. Now before us the ld. AR alternatively submitted that the matter can be restored to the AO for verification whether the receipts have been included in the books of the company. We find that the AO has disallowed the same for the violation of TDS provisions. So in the interest of the justice we are inclined to restore the matter to the AO for fresh verification in terms of the order of the Hon'ble Delhi High Court in the case of CIT v. Ansal Land Mark Township (P) Ltd. (2015) 61 taxmann.com 45 (Del) (Supra). Respectfully following the aforesaid decision of the Hon'ble Delhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d @12% is Rs. 20,56,654/-. So the AO has disallowed the interest expenses claimed by the assessee amounting to Rs. 20,56,654/- on proportionate basis. 22. Aggrieved, assessee preferred an appeal to ld. CIT(A) who has partly allowed the relief to the assessee by observing as under:- "5.1 In such respect, I find that the appellant had borrowed substantial amount of loan and had paid interest but the appellant had advanced interest free loan and no interest was charged, hence, the AO in its order after taking all the details all the advances received during the year has disallowed the proportionate interest @ 12%. In such respect, the appellant has at the outset, contended that out of the said related concerns, M/s Civia Investments Ltd., and Swati Miing P. Ltd. which were not at all in any manner appellant's sister concerns or its partners or its relatives. In such respect, the appellant has filed the shareholding of such concerns along with Form 23B as filed with the ROC. Further, the appellant in the course of hearing also filed detailed working of the interest worked out and the AO has pointed out that on basis of such working that interest in such respect works out only to Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e total interest claimed by the assessee stands as under:- Interest paid Group summary 1-April, 2008 to 31-Mar-2009 Particulars Closing Balance Debit Credit Interest on car loan 26,003.00 Interest on sale tax 33,545.00 Interest on u9nsecxured loans 7,74,260.37 Interest to bank 9,19,547.00 SSI term loan interest 420.00 Usence period interest for L C credit 1,01,50,223.20 Grand total 1,19,03,998.57 In the instant case the AO has disallowed the expenses of interest on the ground that the loan bearing fund has been diverted and interest on the same has been claimed by the assessee. From the above amount of interest the interest can be considered for the disallowance only for Rs. 16,93,807.00 (9,19,547.00 plus 7,74,260.00) as the question of diversion of fund on the interest paid on car loan, sales tax, LC credit does not arise. The ld. AR before us submitted to consider the interest amount of loan from the bank only but we reject the same as unsecured loan is also loan bearing fund. In view of above we direct the AO to consider the above stated interest amount for the disallowance under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the closing stock reported to the bank was of Rs. 6,71,55,000/-. Therefore, there was a mismatch in the quantity and the value of closing stock furnished to the bank for Rs. 56,15,283/- which was added by AO to the total income of assessee. 29. Aggrieved, assessee preferred an appeal before Ld. CIT(A) who deleted the addition made by AO by observing as under:- "8. Ground No. 7 In such respect, it was observed that as per copy of stock statement as on 31.3.2009 filed with the bank, quantity of the coke, coal tallied with the quantity shown in Tax Audit Report. The difference in such respect is only in the valuation of the raw material and finished goods. The appellant had contended that it has followed the method of valuation stock at cost over the year and the same has been accepted by the Revenue in all these year for the purposes of bank it has to provide the current value of stock and hence the difference in value as shown in the Audited Accounts and in the stock statement filed with the bank. I find strength in the argument of the appellant and it was also observed the valuation of the stock is on cost basis and such method has not been changed since earlier years. H ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
